David George-Cosh

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Aurora Cannabis Inc. announced Wednesday it will acquire U.S. hemp retailer Reliva LLC, a move that marks the Canadian pot giant's first official foray south of the border. 

Aurora said it will pay US$40 million in stock to buy Reliva, plus up to US$45 million in cash or stock depending on whether certain financial targets are hit. The deal is expected to close in June. 

In a statement, Aurora said that the deal marks the culmination of a "multi-month strategic evaluation" of the U.S. CBD industry. The company said Reliva stood out from other CBD sellers given its focus on regulatory controls, national distribution footprint and "financial discipline". 

"We have taken the time necessary to carefully assess the company's entry into the U.S. market and we firmly believe that the combination with Reliva will create significant long-term value as Reliva provides us options to grow in hemp-derived CBD internationally," said Aurora Cannabis interim chief executive officer Michael Singer in a statement. 

Aurora's U.S. entry comes amid a lack of clarity from the U.S. Food and Drug Administration on whether CBD-infused products are safe for consumption, with much of the available items in the space relegated for topical application. 

It also comes at a time when U.S. hemp farmers face a glut of supply in the market, which has impacted several CBD companies operating in the country. Recently, Canopy Growth Corp. announced plans to shelve its hemp production business while market leader Charlotte's Web Holdings Inc. recently reported a sequential decline in quarterly revenue due to softer CBD sales. 

Aurora stated the deal is expected to provide the company with positive adjusted EBITDA once it closes, adding that Reliva comes with no debt and requires no significant capital expenditures. ​